Dear Mr. Prime Minister,
Distinguished guests and colleagues,
Bună ziua! And thank you for the kind invitation to attend today’s important event. It is a privilege for me to be here – and not least because I welcome the initiative of the Romanian Government’s focus on social inclusion and poverty reduction.
Yesterday we celebrated the International Day for the Eradication of Poverty, a day that is profoundly significant for the World Bank. Our mission is best expressed by the twin goals: eliminating extreme poverty by 2030 and boosting shared prosperity, measured as the income of the bottom 40 percent in any given country. Poverty is a global issue, which touches not only on the poorest countries in the world, but also on many middle-income countries, causing wasted potential and limiting long term growth.
The World Bank will be celebrating 25 years since its offices in Romania first opened and all of the Bank’s activities in Romania during this quarter century have emphasized measures and ideas to encourage poverty reduction and social inclusion.
Let me go on a short historical journey with you. The first World Bank technical assistance (TA) for anti-poverty policies in Romania was in 1993. The challenge then was even knowing how much poverty existed. So, under this TA, the Bank helped the National Statistical Institute (or NIS) to design and implement its first representative household budget survey, a multi-topic survey that captures different dimensions of wellbeing – income, consumption, employment, health, education. This survey has been carried out successfully by the NIS every year since.
The annual responses of about 30 thousand households and more than 70 thousand individuals, giving information about their lives and welfare, represent a very powerful tool in understanding the poverty and social exclusion problems in Romania. From those days onwards, the World Bank has produced a number of poverty assessments in Romania, which have informed the different governments’ anti-poverty policies.
I should say that personally, being here with you is a wonderful opportunity. It has been well over a decade and a half from when I first started working on Romania – on specifically these issues. Over this time, Romania has made amazing progress – since 2001, when Romania still had absolute poverty rates (those living under $1.90 a day) of five-and-a-half percent, today the number is zero. Romania has met the goal of eliminating extreme poverty. If you count those living under a higher threshold of under $3.10 a day, the progress is impressive as well – dropping from 23% in 2001 – a quarter of the population – to around 4% today.
However, this progress seems to have slowed in recent years, especially if we use a different measure of poverty that is more common in the European Union. The decline in the relative poverty rate in Romania was less than one percentage point between 2008 and 2013. And many remain particularly vulnerable to poverty – such as those in the Eastern part of Romania, and especially marginalized groups such as the Roma, who are 10 times more likely to be poor than non-Roma Romanians.
So the agenda remains, and the need for further action remains. And so, in this historical journey of the World Bank’s partnership with Romania on the issues, I am so pleased that the Romanian Government has recently adopted the National Strategy on Social Inclusion and Poverty Reduction for 2015-2020 and the Action Plan for the strategy, and that the World Bank was able to provide expertise in developing it. The large amount of data and research underpinning the strategy can be downloaded from the Ministry of Labor’s website.
The World Bank’s partnership with Romania does not stop at just the analysis of poverty and exclusion. In our partnership journey, I would like to highlight one recent action that has been particularly meaningful – the Minimum Social Inclusion Income, which had been prepared and discussed over many months and found great support in this Government. The legislation has also been approved by the Romanian Parliament just a few days ago and we believe it will have a great impact on poverty reduction in the country. The Minimum Social Inclusion Income is an important step in Romania’s overall reform program, which the World Bank has been proudly supporting through our Development Policy Support program.
We believe in the role of this consolidated benefit, which replaces three narrowly focused benefits – the guaranteed minimum income, the family allowance, and the heating benefit, for numerous reasons: it will be better targeted towards those in need, it will have lower administrative and private costs, it will make the local authorities more accountable, it will encourage beneficiaries to work, and it will encourage access to the social services needed to break the inter-generational cycle of poverty.
For me, and for the World Bank team, the challenge of poverty in Romania is not just theoretical, but also based on real interactions and conversations with those most in need. I vividly remember an occasion last year, when I visited a marginalized community in Buzău. What I saw was a community of people in extreme poverty, which was also a “source community” for a number of children from the child protection system. We spoke to a mother who could only send one of her children to school regularly, because she could not afford proper clothing for the rest, and a young man whose only occasional income was through doing seasonal day labor abroad.
Such people deserve better. Where you are born and the community you are born into should not dictate the fate of the children in poor communities in Romania – yet more than 80% of the poor in Romania are from families in persistent poverty. I cannot over-emphasize the urgency, and the social, moral and economic need develop programs that can tackle both child and adult poverty in the same household simultaneously.
As for the World Bank, we will continue to engage in the journey to contribute to Romania’s development and growth – through our constant engagement with the Government, Parliament, academic and civil society, and all stakeholders. I invite you all to make today’s vision a reality, and to join our efforts to support inclusive and sustainable growth, and a better life for all in Romania.